MATT LAUER: Payday! His company imploded and thousands of stockholders went bust, but the Chairman of Bear Stearns cashes in and gets $61 million dollars. Will there be a backlash?
Watching the intro, I assumed the Chairman, despite Bears' fall, had received some kind of bonus or golden handshake. It wasn't until Maria Bartiromo came on later that we learned that Bear Chairman James Cayne, far from receiving a bonus or bonanza, had incurred one of the worst personal financial losses in the history of the street.
As Bartiromo explained, at the top of the market, Bear Chairman James Caynes's shares in the firm were worth over $1 billion. He has now sold his stake for about $60 million. So here's a guy who has lost about a billion, roughly 94% of the value of his holdings at their peak. But how does Today demagogue it in its opening: "payday"!
Sure, no one's should feel too sorry for Cayne. If he clips supermarket coupons and is careful, he'll probably be able to feed his family on the measly $61 million. Even so, that's no justification for the misleading way NBC played the class-warfare game in depicting the situation in its opening.
Aside: In 2006, Lauer reportedly signed a contract with NBC paying him $13 million per year for five years, a total of $65 million. Let's imagine that as a result of some kind of corporate turmoil, Lauer agreed to be bought out of his contract for $3.9 million, the same 94% reduction that Cayne incurred in the value of his shareholdings from their highest value. Do you think Matt would be touting this as "cashing in" and getting a "payday" for himself?
—Mark Finkelstein is a NewsBusters contributing editor and host of Right Angle. Contact him at mark@gunhill.net.
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Don't Spoil the Story with the Facts
March 28, 2008 - 10:51 ET by allanfYou can't spoil the story with the facts. This is a tale about morality, about evil corporations exploiting workers. It is a tale of uncaring corporate executive who force widows out of their homes.
And you try dare to bring up facts before Matthew Lauer and Maria? How gauche.
By the way, any discussion of CEO pay should also include a discssion on network anchor pay.
Just to be clear: Maria told
March 28, 2008 - 10:52 ET by Mark FinkelsteinJust to be clear: Maria told the story fairly and accurately. But viewers who watched only Matt's intro were misled.
And face it... MANY people
March 28, 2008 - 16:42 ET by Indiana JoeAnd face it... MANY people just "channel-hop," gleaning the openings of this kind of story. Lauer did his job.
He didn't let the facts ruin the "spin."
Too much effort to get input from the "Money Honey"?
March 28, 2008 - 20:03 ET by nkviking75It's not as if Lauer couldn't have gotten Bartiromo to offer some insight, seein's as they work for the same company in two buildings next to each other.
When you put the clowns in charge, don't be surprised when a circus breaks out.
To clarify, as I said, Maria
March 28, 2008 - 22:06 ET by Mark FinkelsteinTo clarify, as I said, Maria did appear later and gave a fair and accurate description of what happened. But Matt's top-of-the-show teaser was very misleading.
NBC may be misleading
March 28, 2008 - 10:51 ET by sarcasmoBut there's no denying that this is a subsidy by a "new" Fed on taking risks with other peoples' money -- especially since the share price went from $0 to $2 to $10 in the space of a week. The media bias we see doesn't negate the fact that there's a "moral hazard." Hyper-rich executives, if given the incentives of welfare queens when they should fail, will behave even more like welfare queens in the future. If that's even possible anymore...
JMR
A corruption-story the TV media will-not cover.
Not a Completey Free Market
March 28, 2008 - 10:59 ET by allanfMoney supply and interest rates, has been regulated by the government for many years, through the Federal Reserve. So these markets are not exactly free of government interference. One can argue that it was the Feds Interest rate rise of April 2007 which precipated the CMO crisis.
The Fed and the Treasury Department have a larger public duty: to ensure that a liquidity crisis does not lead to a loss of capital and production. When financial instruments lose liquidity, and (as happened in 1929) no attempt is made to reinject liquidity into the markets companies can fail. That leads to a loss of jobs, closing of factories and economic chaos.
Free markets are great. But the Fed is a regulated market. Free markets also have singularties called Depressions. These singularties can be prevented, but once they occur it is like death, almost impossible to fix.
None of that changes
March 28, 2008 - 11:01 ET by sarcasmoAnything I said.
This is a tax funded subsidy on executive stupidity and risk. It will, rightly, be called corporate welfare by the Democrats, who will naturally demand a similar bailout for irresponsible home buyers. And they'll probably get it. Not good. And exactly what the Founders warned us about is now happening.
JMR
A corruption-story the TV media will-not cover.
Not Tax Funded
March 28, 2008 - 11:07 ET by allanfMost of it is not tax funded. The Federal Reserve can "create" money and lend it to other institutions. So they can take Bears CMO securities as collateral and lend them the value of the portfolio.
The shareholders of Bear Stearn suffered greatly. That really is not the concern of the Fed. The Fed's duty is to ensure markets remain liquid and do not fail. Once financial markets fail a Depression can ensue.
Death is a natural part of life, but it is not desired. So to Depression is a natural consequence of unregulated markets. Once a Depression occurs, there is a real loss of wealth, jobs and industrial capacity. It is very hard to fix.
Better to ensure liquidity of markets than to allow the natural death of "Depression" to occur.
All of it that's not tax funded
March 28, 2008 - 11:38 ET by sarcasmoIs inflation funded on the backs of future generations. And business cycles are natural. While depressions did happen before the USA had a Fed, they were never as bad as after the Fed existed, even not counting the rampant inflation since 1913. It's hard to argue the Fed's a good thing on those particularly-swampy historical grounds, because the Great Depression happened on the Fed's watch.
It's central planning when this kind of decision is made by our obese government in favor of well-connected firms like JP Morgan. You remember the policy that made the Soviet Empire fail? Same thing, central planning, and it'll lead to the same results here. Poorly run companies need to fail, even if it causes some political problems & pain for major political parties, for the same reason heroin addicts need to quit. The CEO in this story is not really much of a victim, but the shareholders definitely were.
JMR
A corruption-story the TV media will-not cover.
Sarc
March 28, 2008 - 13:22 ET by allanfI appreciate your libertarian point of view. Government regulation usually benefits only the regulators. But markets can fail. As with medical illness, laisez-faire in the economy can in a liquidity crisis lead to disaster.
The Feds actions will not be particularly inflationary. The CMO crisis results in a decrease in the M2 measure of the money supply. The Fed is acting to fix that be reinjecting money.
We'll see...
March 28, 2008 - 13:25 ET by sarcasmoSince the government that's causing it gets to "measure" and then "report" their interpretation of inflation, you'll hopefully understand why I stand by each and every one of my words in this thread...Some of us have been warning of a derivatives crisis for about a decade, so the "it's ok" side is going to have to deal with a bit of "I told you so" at this point for the sake of intellectual honesty. And truly free markets do not ever "fail," but fatcat executives who preach but don't practice them tend to fail quite a bit. As in this case...
JMR
A corruption-story the TV media will-not cover.
WRONG!!!
March 28, 2008 - 13:44 ET by c5thenThe FED was chartered to be the "Central Bank" of the US and to be the issuer of it's currency and support that currency however necessary. Now the FED has decided that it's mission is to try and control the US economy, which no one really understands enough to get the whole picture. The FED is not even a Government entity, it is just "run" by a Board of Directors that have the Chairman and some of the other members appointed by the President.
It's first try at "controlling the US economy" resulted in the Great Depression and was caused directly by the FED and their policies. The result was that massive amounts of capital were transfered from individuals and small businesses to the great bank institutions of the east coast and Europe. That was the whole intention.
From the founding of this country on up until 1900 the inflation rate totaled -0.5%. That's right you read that correctly, in 1900 the same dollar would buy a little bit more than it did in 1800. After the FED took over in 1913, inflation has averaged 3%/year such that in 2000 it would take almost $300 to buy what $1 bought in 1900!
The FED is the single worst thing that has ever happened to this country, bar none!
The day that "politician" became a career choice is the day we started losing the Republic. Let's get it back! Alan Keyes '08.
strangely...
March 28, 2008 - 13:51 ET by sarcasmoYou're apparently replying to my comment, but you're not contradicting a single thing I've said about the Fed...
JMR
A corruption-story the TV media will-not cover.
Matt "Katie Couric's
March 28, 2008 - 13:12 ET by fitzfongMatt "Katie Couric's Ex-Fluffer" Lauer makes $13 million a year? Wow! How much control do the Peg Bundys of the world have over discretionary spending?
gotta love the MSM's stale portrayal of CEOs
March 28, 2008 - 16:07 ET by Jnoble..as that mustached guy from the Monopoly board. Or top-hat wearing stuffy old guys with monacles and cigars rubbing their hands together with glee after laying off even more John Q Publics for no reason